GST on Furniture: Wooden Chairs, Tables, & Plywood GST Rates

The implementation of GST on May 18, 2017, significantly impacted the USD 28.38 billion Indian furniture industry. While some furniture types have seen increased costs, the Input Tax Credit (ITC) helps manufacturers offset these expenses.

This article reviews the GST on furniture for various furniture types, exploring the pros and cons of GST and its implications for the industry, offering manufacturers insights to assess its impact on their businesses.

GST Rates on Wooden Furniture

Most wooden furniture items, such as chairs, tables, wardrobes, and beds, are subject to a standard GST rate of 12%. This rate also applies to a variety of wooden products, including:

• Wood flour and wood wool.
• Wooden sticks used for umbrellas, walking sticks, and tool handles.
• Wooden sleepers for railways or tramways.
• Coarsely trimmed wooden sticks.
• Wooden pallet collars.
• Staves and other coopers’ items like barrels and casks.
• Wooden jewellery boxes and cutlery cases.
• Kitchenware, utensils, and tableware made of wood.
• Wooden statuettes and decorative items.
• Packaging barrels, cases, crates, and containers.
• Items such as pencil slats, match splints, and marine equipment like oars and paddles.
• Wooden items used in textile machinery, including clothes hangers and bobbins.

Applicable GST Rates for Different Kinds of Wooden Furniture

• NIL: Firewood or wood charcoal
• 5% GST Rate: Wood in chips, sawdust, or waste wood; articles like wooden boxes, drums, crates, umbrellas, walking sticks; wood pulp and bamboo pulp
• 12% GST Rate: Wooden furniture items such as tableware and kitchenware
• 18% GST Rate: Wood tar, vegetable pitch, wood naphtha, brewers’ pitch, wood tar oils; residual lyes from wood pulp manufacturing, including chemically treated substances like lignin sulfonate
• 28% GST Rate: Fiber wood, plywood, laminated wood, and other materials resembling wood. Engineered wood and plywood also attract a GST rate of 28%, significantly impacting the overall cost of wooden furniture due to their common use in manufacturing.

HSN Code For Wooden Furniture

The HSN code for wooden furniture is 9403. This code helps classify different types of wooden furniture for accurate GST calculation.

GST on Steel and Metal Furniture

Steel and metal furniture generally fall under the 18% GST slab. This includes items such as:

• Chairs
• Tables
• Cabinets
• Almirahs
• Office furniture

However, be careful to note that specialized metal equipment or custom-made furniture may fall under a different tax slab. Apart from that, the tax rate may vary if the furniture is made of more than one kind of base material. For example, a glass table with metal legs may attract a higher GST due to the presence of glass (taxed @ 28%) in it. 

HSN Code for Metal Furniture

HSN code for metal furniture is typically 94031010.

GST on Plastic Furniture

Plastic furniture such as plastic chairs, tables generally attracts a 12% GST rate. This covers a wide range of plastic furniture items, including chairs, tables, storage units, and other household items.

However, keep in mind that the GST rate on furniture made of plastic is subject to change if the furniture is custom-made or has any upholstery (taxed at 18%). Moreover, the tax rate also comes down to the purpose the furniture is used for.

HSN Code for Plastic Furniture

HSN code for plastic furniture is typically 940370.

Exemptions and Concessions on Furniture Under GST

While most furniture items are subject to standard GST rates, certain categories may qualify for exemptions or concessions.

Used Furniture

• Potential exemption: Used or second-hand furniture might be exempt from GST or subject to a reduced rate, depending on its condition and resale value.
• State-specific rules: The tax treatment of used furniture can vary across different Indian states.

Furniture Exports

• Zero-rated supply: Furniture exported from India is generally considered a zero-rated supply, meaning no GST is levied. Exporters can claim a refund of input tax credits paid on inputs used in the production of exported furniture.

Government Schemes and Incentives

• Small-scale manufacturers: Certain government schemes might offer tax incentives or subsidies to small-scale furniture manufacturers, indirectly impacting the overall cost of furniture.
• Custom duty concessions: Importers of raw materials used in furniture manufacturing may benefit from customs duty concessions, which can reduce the final cost of the product.

How GST Changed Furniture Taxation: A Pre and Post-GST Analysis

The introduction of GST has significantly reshaped the taxation landscape for the furniture industry.

Pre-GST Era Tax on Furniture

Before the implementation of GST, the furniture industry was primarily governed by the Value Added Tax (VAT) regime. This resulted in a complex tax structure with varying rates across different states in India. Manufacturers and retailers often faced challenges due to cascading effects of taxes, leading to higher prices for consumers.

Example of Pre-GST Scenario (hypothetical)

• Selling price: Rs. 5,000
• VAT on selling price (assuming 12.5% VAT): Rs. 625
• Input VAT credit on raw materials (assuming 5% VAT): Rs. 100
• Net tax liability: Rs. 525

Post-GST Era Tax on Furniture

The introduction of GST brought about the following changes:

• Uniform tax rate: The implementation of a nationwide GST rate of 12% for most furniture items has simplified the tax structure.
• Input Tax Credit (ITC): Manufacturers and dealers can now claim credit for taxes paid on inputs, leading to potential cost savings.
• Increased compliance burden: While GST has simplified the tax structure, it has also increased compliance requirements for businesses.

Example of Post-GST Scenario (hypothetical)

• Selling price: Rs. 5,000
• GST on selling price (12%): Rs. 600
• Input Tax Credit (ITC) on raw materials (assuming 18% GST on wood): Rs. 360
• Net GST liability: Rs. 240

As evident from the example, the GST regime introduced a higher tax rate but also allowed for input tax credit, which can partially offset the tax burden.

Impact of GST Rate on Furniture Industry

The implementation of GST on furniture items has brought both challenges and benefits to the furniture industry:

• Increased Transparency: GST has streamlined the tax structure, bringing transparency to pricing and reducing the complexity of tax compliance.
• Cost Implications: The varying GST rates for different types of furniture affect the final price, with metal furniture experiencing higher cost increases due to the 18% rate.
• Market Dynamics: The standardized tax rates have made it easier for businesses to operate across state lines, fostering a more unified national market.
• Competitive Pricing: The elimination of multiple cascading taxes has led to more competitive pricing and has potentially lowered the overall cost burden on manufacturers.

Advantages Of New GST Structure For Furniture

Now that we’ve discussed the overall impact of GST rate on furniture industry, it’s time to go over the advantages of the imposition of GST for furniture:

• Simplified Transaction Values: The GST system has simplified the process of determining transaction values by having a uniform tax rate across states.
• Elimination of Hidden Taxes: With GST, hidden taxes such as excise duty, VAT, and others have been eliminated, leading to clearer pricing and easier GST calculation.
• Cheaper Manufacturing Items: Manufacturers can now claim input tax credits on raw materials, reducing the overall cost of production.
• Creditable Taxes: Businesses can claim credits for taxes paid on inputs, reducing the effective tax rate and promoting more business investments.
• Reduction in Fraud and Corruption: The digital nature of GST has reduced opportunities for tax evasion and corruption.
• Simplified Business Expansion: GST has simplified the process for businesses to expand across state borders, encouraging growth and scale.

Related Reads:

• GST on Stationary
• GST on Education Services
• GST on Clothes

Frequently Asked Questions

Q1. What are GST rate slabs: NIL, 5%, 12%, 18%, and 28%? 

GST rate slabs refer to the different categories of tax rates that goods and services are taxed under the GST regime in India. These slabs are NIL or tax-exempt under GST exemption (0%), 5%, 12%, 18%, and 28%, and are determined based on the type of product or service. 

Q2. Is GST applicable on used furniture?

Used or second-hand furniture might be exempt from GST or subject to a reduced rate, depending on its condition and resale value.

Q3. What is the GST rate for rental furniture?

The GST rate for rental furniture generally falls under the 18% slab as it is considered a service. 

Q4. Can we claim GST on office furniture? 

Yes, businesses can claim Input Tax Credit (ITC) on office furniture as long as it is used for business purposes. 

Q5. Is ITC allowed on furniture?

 Yes, ITC is allowed on furniture purchased for business purposes. This allows businesses to reduce their overall tax liability. 

Q6. How is GST applied to modular furniture?

 Modular furniture is typically taxed at an 18% GST rate. However, the rate may vary if the furniture includes materials that fall under different tax slabs. 

Q7. How does GST impact the cost of furniture for consumers?

 GST impacts the cost of furniture for consumers by standardizing the tax rate across different types of furniture. While some furniture may see a cost increase due to higher tax rates, the overall transparency and ability to claim ITC can help manufacturers offset these increases.

Q8. What is the GST rate on custom-made furniture? 

Custom-made furniture may attract different GST rates based on the materials used. Typically, it falls under the 18% GST rate, but if it includes materials like glass (taxed at 28%), the overall GST rate may be higher.

Q.9. What is the GST on plastic chairs?

GST on plastic chairs is 18%.